Update: USPS Board Ready to Override PRC on Rates

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The tug of war between the U.S. Postal Service's Board of Governors and the Postal Rate Commission over postal rates and fees moved closer to resolution with the board apparently holding the last tug.


The board decided at its monthly meeting in Washington to send the recommended rate increases implemented in January back to the PRC. The governors want to overturn the PRC's recommendation to cut the postal service's rate request from a 6 percent average increase to a 4.6 percent increase.


PRC spokesman Stephen Sharfman said the agency is looking into the request. He said that there was no deadline for when the PRC had to respond but that it must respond "expeditiously."


If the PRC again refuses to OK the 6 percent rate increase, the governors have the power to raise rates unilaterally by a unanimous vote. Insiders said it seems likely that they will do so.


Neal Denton, executive director of the Alliance of Nonprofit Mailers, said that even if the BOG decides not to raise all rates, it might "go after a couple of rate cells that would generate quick cash."


Regardless of what the board decides, it is likely that direct marketers and magazine publishers would be especially hard hit.


The USPS originally called for average increases of 3.5 percent for First-Class; 14.2 percent for periodicals; 4.9 percent for enhanced carrier route and 9.4 percent for all other Standard-A mail; and 1.3 percent for package services, including parcel post.


The PRC's recommended average increases for each mail class were significantly lower. The rate increases were 1.8 percent for First-Class; 9.9 percent for periodicals; 4.5 percent for enhanced carrier route and 8.8 percent for all other Standard-A mail; 2.7 percent for package services, including parcel post; 17.6 percent for bound printed matter; 16 percent for Priority Mail; 7.2 percent for nonprofit periodicals; and 4.8 percent for nonprofit standard.


Board chairman Robert F. Rider said in a statement that the "governors found that the rates and fees recommended by the commission do not meet the statutory policy of breakeven and jeopardize the postal service's financial situation during this fiscal year and future years.


"Therefore, the governors are returning the case for reconsideration, as provided for in the Postal Reorganization Act," Rider said. "We again ask the commission to reconsider this matter as quickly as possible."


At the board's meeting, Postmaster General William Henderson said the USPS was running a $200 million loss through January for fiscal 2001, which began in September.


The dispute between the USPS and the PRC began in December when the governors allowed under protest the 4.6 percent postage increase recommended by the PRC.


After that, the USPS claimed that the PRC exceeded its authority when it reduced the amount of new revenue designated for the contingency fund from $1.7 billion to $1 billion.


In February, the PRC recommended an increase in bound printed matter rates of 8 percent to 10 percent more than the 17.6 percent average increase that took effect in January.


"The USPS will probably take the PRC to court and challenge the agency's authority to alter or change the USPS' revenue requirement," Denton said.


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